Pomerantz Settles Ground-Breaking BP Litigation

POMERANTZ MONITOR | MARCH APRIL 2021

After nine years of hard-fought litigation, Pomerantz recently obtained a confidential, favorable monetary settlement from BP plc for our nearly three dozen institutional investor clients from around the globe that had sought to recover losses caused by BP’s devastating 2010 Gulf of Mexico oil spill, the worst such disaster in U.S. history. Our ground-breaking work created a new path forward for investors in foreign-traded securities to pursue remedies in U.S. courts, while establishing cutting-edge precedent for securities claims brought under English common law.

Shortly after the Deepwater Horizon rig exploded and sank less than 100 miles from the U.S. coast, the price of BP’s ordinary shares and American Depository Shares (ADSs) plummeted, amid revelations of the spill’s true scale and BP’s inadequate safety commitments and inability to contain it. While BP investors could pursue U.S. federal securities law claims in U.S. courts to recover their losses in its U.S.-traded ADSs, the U.S. Supreme Court’s decision in Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247 (2010) barred use of those laws to reach foreign-traded securities, undoing decades of prior precedent. Investors in BP’s London-traded ordinary shares seemed to lack legal recourse in U.S. courts.

Pomerantz’s BP litigation has the distinction of being the earliest successful workaround to the roadblocks set by Morrison. Our novel arguments – and our successes – paved the way for investors, both foreign and domestic, to pursue foreign law claims, against a foreign company, seeking recovery for foreign-traded shares, in U.S. courts post-Morrison.

Given our institutional investor clients’ lack of remedy under the U.S. federal securities laws for their losses in BP’s ordinary shares, starting in 2012, we began filing individual lawsuits alleging common law claims, which were consolidated for pretrial proceedings before U.S. District Judge Keith Ellison of the Southern District of Texas. Thereafter, Pomerantz survived three rounds of BP’s motions to dismiss, as well as BP’s related motions for reconsideration and other contested motions, to safeguard our clients’ rights. In the process, the Firm earned a series of closely followed, cutting-edge wins on behalf of the 125+ institutional investors who ultimately pursued such claims against BP.

In 2013, Pomerantz survived BP’s first motion to dismiss, which had argued that the U.S. Constitution’s Dormant Commerce Clause and the forum non conveniens doctrine required dismissal of our U.S. lawsuits in deference to U.K. courts, which impose a loser-pays regime that disincentivizes high-risk, contingent litigation. This win secured the rights of U.S. institutional investors, who also had U.S. federal law claims concerning BP’s U.S.-traded American Depository Shares, to simultaneously pursue English common law claims concerning their BP ordinary share losses in U.S. court.

In 2014, Pomerantz survived BP’s second motion to dismiss, securing the same rights for foreign institutional investors by again defeating BP’s forum non conveniens argument, which this time had argued that non-domestic investors, including ones based in the U.K., should have their cases dismissed for pursuit in U.K. courts. We also persuaded Judge Ellison to reject BP’s argument that a U.S. federal statute, the Securities Litigation Uniform Standards Act of 1998, should be extended to cover foreign law claims and thereby serve to extinguish them in deference to non-existent U.S. federal statutory remedies. This win opened the door for institutions worldwide to pursue claims within the limitations period, including Pomerantz clients from Canada, the U.K., France, the Netherlands, and Australia.

In 2017, we survived BP’s third motion to dismiss, securing the rights of investors who retained BP stock, rather than purchased it anew, in reliance on the fraud to seek recovery under English law for investment losses. The U.S. Supreme Court had barred this approach, often called a “holder claim,” under the U.S. federal securities law in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975). However, we spent years developing detailed documentary evidence with our clients and their outside investment management firms and consulting with an English law expert to develop robust amended complaints alleging the predicates to a “holder claim” theory under English law. To do so, we fought to secure our right to amend our complaints to plead this theory, over BP’s opposition, which Judge Ellison granted. This years-long effort developed facts evidencing actual, documented reliance by our clients and their investment managers on specific aspects of the alleged fraud and their contemporaneous decisions on identifiable dates to maintain their BP investment, rather than reducing it, reallocating it, or eliminating it altogether. The Court agreed that, for some Pomerantz clients, we had pled cognizable damages, legally sufficient reliance on the alleged fraud, and adequately memorialized investment retention decisions. This ground-breaking ruling has precedential value for both U.S. and Commonwealth of Nations courts, given the scarcity of precedent validating a “holder claim” theory of recovery for investors.

Beyond these motion wins, Pomerantz also applied considerable pressure on BP through our extensive, sustained discovery efforts. The Firm oversaw a multi-year effort to access BP’s most relevant documentary evidence. We worked with e-discovery vendors to run analytics, threading, and search terms on 2 terabytes of BP materials (~1.5 million documents) from prior oil spill litigation and oversaw a review team that pared the data set down to 45,000 documents. Having done so, we pressed BP for additional documents and later pursued a successful motion to compel, over BP’s opposition, that resulted in the Court’s ordering BP to run 60+ Pomerantz -authored searches on the email accounts and document drives of the individual defendants, other high-value BP employees, and BP Investor Relations personnel. We oversaw efforts to search and review the resulting ~150,000+ documents. We worked with consultants to load the post-review documents into a trial preparation platform to enhance our ability to examine witnesses, brief further motions, and prepare for trial. Throughout these efforts, we organized the other plaintiff firms with lawsuits on file to contribute resources and attorney hours, achieving efficiencies through collaboration that kept our clients’ litigation expenses relatively low.

In early 2021, before our clients or their outside investment managers were ever deposed, we succeeded in resolving the BP litigation for a confidential, favorable monetary settlement for our nearly three dozen clients, including three newly signed clients who, just months earlier, had switched representation after eight years of litigation to retain Pomerantz as their BP counsel.

Pomerantz’s BP litigation was led by Partner Matthew L. Tuccillo, who briefed and argued most motions on behalf of the Firm and its clients, oversaw the Individual Action Plaintiffs’ Steering Committee, and served as sole interface with BP and the Court on behalf of all institutional plaintiffs. Pomerantz’s BP team included Managing Partner Jeremy A. Lieberman, Senior Counsel Marc I. Gross, and Partner Jennifer Pafiti, among many other contributing attorneys and staff.